Technically Speaking

Weekly Analysis: Energy Markets

Source: DTN ProphetX

Brent Crude Oil: The spot-month contract closed $4.52 higher at $52.65. The spot-month contract posted a new 4-week high of $54.05, turning the secondary (intermediate-term) trend up. However, last week's strong rally has it already testing resistance between $52.70 and $55.93, prices that mark the 38.2% and 50% retracement levels of the previous secondary downtrend from $69.63 through the spike low (in conjunction with a bullish reversal the week of August 24) of $42.23. Weekly stochastics are bullish indicating momentum could continue to increase. The 61.8% retracement level is up at $59.16.

Crude Oil: The spot-month contract closed $4.09 higher at $49.63. The secondary (intermediate-term) trend is up with the spot-month contract testing resistance at $50.16. This price marks the 50% retracement level of the previous secondary downtrend from $62.58 through the spike low (part of a bullish reversal the week of August 24) of $37.75. Weekly stochastics remain bullish indicating noncommercial traders could continue to add to their net-long futures position. The most recent CFTC Commitments of Traders report showed this group holding a net-long of 258,261 contracts, an increase of 6,533 contracts from the previous week. The 61.8% retracement level is up at $53.09.

Distillates: The spot-month contract closed 7.10cts higher at $1.5909. The spot-month contract posted a new 4-week high of $1.6379, confirming the secondary (intermediate-term) uptrend indicated by the bullish reversal from the week of August 24. Weekly stochastics are bullish indicating noncommercial traders could continue to cover some of their net-short futures position. The most recent CFTC Commitments of Traders report showed this group holding a net-short of 5,131 contracts, 5,941 contracts less than the previous week. Major (long-term) resistance is at $1.8454, the 23.6% retracement of the downtrend from $3.3700 (January 2014) through the August 2015 low of $1.3745.

Gasoline: The spot-month contract closed 7.53cts higher at $1.4167. The secondary (intermediate-term) trend remains sideways, but nearing an upturn. The spot-month contract is within striking distance of establishing a new 4-week high beyond $1.4531. Weekly stochastics are neutral-to-bullish below the oversold level of 20%. The most recent CFTC Commitments of Traders report showed noncommercial interests increasing their net-long futures holding by 2,622 contracts to 67,296.

Ethanol: The spot-month contract closed 3.4cts lower at $1.541. Despite the lower close the secondary (intermediate-term) trend remains up. The spot-month contract ran uncovered new selling as it neared resistance at $1.665 (last week's high was $1.619), a price that marks the 38.2% retracement level of the previous downtrend from $2.265 through the low of $1.292. Weekly stochastics remain bullish.

Natural Gas: The spot-month contract closed 5.1cts higher at $2.502. Technical indicators show the secondary (intermediate-term) trend to be down following the new low posted the week of September 28. However, the spot-month contract could look to consolidate above the new low of $2.403, allowing weekly stochastics to establish a bullish crossover below the oversold level of 20% over the coming weeks.

Propane (Conway cash price): Conway propane closed 1.75cts higher at $0.4525. Technical indicators show the secondary (intermediate-term) trend remains up. However, weekly stochastics over 80% indicate the market is in an overbought situation. Cash propane could consolidate below initial resistance at its recent high of $0.4700 (also the 4-week high), still below its target price of $0.5542. The latter marks the 23.6% retracement level of the previous downtrend from $1.4825 through the low of $0.2675.

The weekly Commitments of Traders report showed positions held as of Tuesday, October 6.

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